How to Split Up a Joint Mortgage
Mortgage loans are often jointly owned.
These home loans are often quite costly and long term, and require a strong dual income to support the mortgage payment.
In many cases, the two signers on the mortgage are married couples. In other cases, joint tenants are boyfriends and girlfriends, siblings or children and parents. However, if the time comes to split the mortgage, the process can be challenging. Unfortunately, the mortgage cannot be split evenly--instead, there is only one option: refinance.
Review the divorce agreement with your attorney, your ex-spouse and your attorneys, if you are getting a divorce. It is important to consult the agreement to make sure that you are following the orders of the divorce judge. Divorce court tries to be equitable--either requiring the house be sold or requiring one party to buy out the other. Consult this document before approaching a mortgage split.
Pull a copy of your credit report if you plan to retain the mortgage. You can get a free copy at annualcreditreport.com. You should also pay for a copy of your FICO score--a three-digit number between 300 and 850. This number represents your total creditworthiness. Scores over 720 are great; scores below 600 are poor.
Speak with the second signer on the mortgage about the split if you are not getting divorced. You need to reach a settlement with the second party. You cannot split the mortgage into two halves, but you can refinance and require the other party to pay your instalment payments.
Hire an attorney to draw up paperwork if you will be buying the other party out (or vice versa) or if you will be setting up private loan payments. A legal contract is essential in either of these cases. A mortgage is a huge debt and therefore you want to be sure you are protected.
Research lenders if you plan to refinance. Use your FICO score as a guide. If you have great credit, apply at local credit unions and banks. If you have some problems on your credit report, you will need to apply at finance companies, too (such as CitiFinancial or HSBC Financial).
Complete the refinance process with the lender of your choosing. Make sure you bring the second party to the refinance so that he/she understands the loan structure and his/her responsibilities.
- Existing mortgage paperwork
- Income documents (for both signers)
- Homeowners insurance
- Divorce agreement (if applicable)